Multi Asset

Though the inflation debate continues, we concur with the Federal Reserve that price increases will be manageable. We believe the Fed can conduct monetary operations along its well communicated path, paving the way for reaccelerating, above-trend 4Q21 real GDP growth.

For skeptics who have yet to take the Federal Reserve at its word, its response to recent inflation data should be another indicator that policymakers are in no hurry to deviate from their path of easy monetary policy.

We have strong conviction that the U.S. and global economic expansion will continue at an above trend pace this year, and that growth will persist into 2022.

Fear of runaway inflation remains at the top of investors’ list of concerns—a closer look at the data suggests cooler heads will prevail.

The U.S. economic outlook continues to strengthen, with accelerating vaccinations, broadening activity and government support. The global economy should accelerate, but with less certainty due to uneven vaccination progress across countries.

We believe the economy will grow well above trend throughout 2021, as massive pent-up consumer demand is released by vaccination progress, states reopening and highly accommodative government policy.

Our outlook continues to be that economic recovery is in the offing and will broaden into synchronous, global expansion. Segments of the economy that were protected from the pandemic should stay in a healthy holding pattern.

Headlines suggest a significant disconnect between “Main Street” and “Wall Street”—a closer look at personal income and leading economic indicators reveals a different story.

With two COVID-19 vaccines approved in the U.S. and more fiscal stimulus about to be deployed, there is a clear bridge (vaccine) to post-COVID normalcy and abutments (stimulus) that should keep the recovery on course. 

Despite the recent coronavirus surge and probable upcoming socially isolating, winter hunkering required, we think stocks can continue to hold their own against bonds.